Singapore to Cap Homes in Bid to ‘Discourage’ Shoebox Units

By Pooja Thakur -
Sep 4, 2012

Singapore will cap the number of
homes that can be developed in suburban projects as it seeks to
curb the increasing trend of so-called shoebox apartments.

The government plans to limit the number of homes for
apartment projects outside the city’s central area to
“discourage” shoebox units, the Urban Redevelopment Authority
said in a statement posted on its website today. The new rules
will be implemented from Nov. 4.

The island state’s population growth, scarce land and
surging property values have prompted developers to shrink
housing space. Residential prices surged to a record at the end
of 2011 in a city that’s about half the size of Los Angeles, and
the government said in May it’s concerned that shoebox
apartments are mushrooming as private home sales surged to a
three-year high with record purchases of units that are smaller
than 50 square meters (538 square feet).

“The new guidelines will discourage new developments
consisting predominantly of ‘shoebox’ units outside the central
area, but at the same time give flexibility to developers to
offer a range of homes of different sizes to cater to the needs
of various demographic groups and lifestyles,” according to the
statement.

Shoebox units will increase more than four-fold to about
11,000 units by the end of 2015 from 2,400 at the end of last
year, the authority said.

‘Almost Inhuman’

Singapore should curb the trend of shoebox apartments
because they are “almost inhuman,” said Liew Mun Leong, chief
executive officer of CapitaLand Ltd. (CAPL), Southeast Asia’s biggest
developer. The government should intervene because these
projects are “wasting” the country’s scarce land resource, he
said in the interview in May.

The smaller apartments helped boost sales, comprising 2,766
units or 42 percent of the sales in the first quarter, Li Hiaw
Ho, executive director at CBRE Research, said in an e-mailed
statement in July.

Home sales have climbed to 12,254 units this year through
June 30, according to data from the authority. Suburban projects
will be the “driving force” for developers in the second half
of 2012, PropNex said.

The government’s guidelines are a “welcome move” amid
concerns of smaller homes dominating the suburbs, according to
Jones Lang LaSalle.

Consumer Trends

“The policy itself is well thought through,” Jones Lang,
a Chicago-based property brokerage, said in an e-mailed
statement. “Central area, where land prices are high, is
excluded thereby allowing market forces to continue to dictate
the relevant housing form especially through the measures of
financial affordability and equally that of consumers’
preferences and trends.”

The government doesn’t want shoebox units to form a
“disproportionately large portion” of the housing supply in
Singapore, the Urban Redevelopment Authority said today. Some
new housing developments are made up mostly of these smaller
units, sometimes as much as 80 percent of a project, it said.

A large concentration of such developments could add stress
to the local road infrastructure with more units that the
government had planned for, according to the statement.